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On Our Radar

Why Clovis Oncology Fell 7.1% in August

What happened

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Shares of Clovis Oncology(NASDAQ: CLVS), a commercial-stage biotech focused on cancer, fell more than 7% in August, according to data from S&P Global Market Intelligence. The decline was owed to the company sharing good and bad news with investors during in its second-quarter report.

So what

Here's a review of the headline numbers from the company's second quarter:

Sales of the company's newly launched ovarian cancer treatment Rubraca came in at $14.6 million for the period. This figure was more than double the $7 million in revenue produced in the first quarter and was also comfortably ahead of the $12.5 million that Wall Street expected.

Net loss for the quarter was $175.4 million, or $3.88 per share. However, this figure included a $117 million charge related to a legal settlement. Excluding the legal charge, net loss would have been $58.4 million, or $1.29 per share. That figure was slightly worse than the $1.27 that market watchers had predicted.

Cash usage during the quarter was $69.1 million.

Clovis ended the quarter with more than $671 million in cash thanks in large part to a $325 million secondary offering performed in June.

Financial updates aside, Clovis also had several other highlights to share with investors:

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Data from its pivotal maintenance confirmation study -- Ariel3 -- will be presented later this year at the European Society for Medical Oncology 2017 Congress.

The company is on track to submit a supplemental New Drug Application to the FDA by October seeking to expand Rubraca's labeling to be used as a second-line and maintenance treatment of ovarian cancer.

Rubraca is pending approval in Europe and the company is actively working to build out the infrastructure to support a launch.

The company announced a clinical collaboration with Bristol-Myers Squibb to study Rubraca in combination with Opdivo as a hopeful treatment for multiple tumor types. Clinical trials are expected to begin before the end of the year.

Despite sharing mostly good news, traders appeared to be laser focused on the company's higher-than-expected quarterly loss. Since shares had risen more than 90% between January and the start of August perhaps the small pullback was warranted.

Now what

Clovis has had a heck of a run recently, but there are reasons to believe the bullish move isn't done yet. Sales of Rubraca should continue to surge higher from here, especially if the company wins marketing authorization in Europe and is granted its label expansion claim in the U.S. Furthermore, the company's partnerships with Bristol-Myers and Roche hold promise to expand Rubraca's labeling to include breast cancer, gastroesophageal cancer, and gynecological cancers down the road. If all of that works out then the drug's current peak sales estimate of $1 billion could prove to be far too low.

In total, Clovis is cash-rich, growing fast, and investors have multiple catalysts ahead to look forward to. Count me as a bull on this speculative growth stock.

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